Is the IP system out of control or is it phishing for phools that is out of control. Why would companies be so protective of their trademarks if they didn’t serve some very useful purpose. Do customers respond to a thankyou from Citi? If they do, why? And if they don’t, why would Citi care? Manipulating and being manipulated are so common and accepted as a business practice that even Tabarrok wants to blame the “IP system” rather than the manipulators and manipulation.

I think part of the problem is the trademark system effectively requires companies to be extremely protective of their trademarks. Through the doctrine of abandonment, if a company is found to not have been particularly zealous in enforcing its trademark, it can lose the trademark entirely. This encourages corporate lawyers to err on the side of being very aggressive to establish a record of zealous defense as well as deter anything that remotely approaches infringement.

True enough, but why do companies go to such lengths to protect trademarks. They do it because trademarks must work with customers on some level, not a high intellectual level is my guess. Thankyou! Phishing for phools.

Trademark is about identification. It prevents other businesses making their product confusingly similar to yours and freeloading on your reputation. Without control of your identity you don’t have an incentive to build a reputation.

Discussion of IP isn’t helped by the term being used to cover things with two entirely different basic purposes.

Copyright, patent, design right, database right &c. are intended to provide incentives to do work in areas where the work is difficult to do in the first place but easy to reproduce once done.

Trademark, Heraldry &c. are designed to protect identification by giving a person or company exclusive rights to certain symbols.

That’s not really how it works. Abandonment relates to stopping use of a trademark without intent to resume. What you are talking about is the fact that the number of third party users of similar marks can affect the breadth of protection afforded to the mark. That can encourage companies to enforce vigilantly, since anyone they let go may later be cited as reducing the scope of protection of their trademark registration.

This is the product of the “America thinks to create wealth while the rest of the world works with their hands to buy what America thinks of” justification of outsourcing as many manufacturing jobs and destroying labor unions that drove policy in the 80s.

To cut taxes required cutting government spending, like funding to universities to do research by paying students to work as research assistants and teaching assistants to free up professors to do R&D to invent computers, software, computer languages, AI, networks, wireless data, data mining, etc, so inventions needed to be monetized by protecting ideas from copying, so ideas becomes highly valued private property in the 80s getting big government jack boot protection.

The good news is that Trump is set to be the strongest anti-frivolous-lawsuits US president in history. He filed every one of his 2,000 lawsuits based only on society’s most important legal principles.

I’m generally a critic of overreach in IP, but this post and the comments suggests that a little primer on Trademark Law is in order.

A trademark is registered in association with specifically enumerated wares or services. (Let’s ignore common law trademark rights for the purpose of this discussion, because the AT&T/Citi beef is about registered marks.) So I can register the trademark “thankyou” (what is called a “word mark”, i.e. not a visual design but a set of words in arbitrary typeface) in association with a category of wares, let’s say “snack cakes”, in the US. You can then register the word mark “thankyou” in association with, say, housecleaning services in the US.

You and I can then co-exist in the market: I sell my off-brand Twinkies under the label “thankyou” in convenience stores, and you market your house-cleaning services with fliers slipped under homeowners’ doors with your company name “thankyou maid services” at the top of each flier. As long as there is no significant risk of a consumer confusing the source of my product for the source of your service, or vice versa, everything is hunky-dory.

The US Patent and Trademark Office can deny registration of a mark if it is not “distinctive”. One way a mark can be deemed not to be distinctive is if it “descriptive” of the wares or services being marketed: e.g., I can sell snack cakes under the trademark “thankyou”, but not under the trademark “cake”, because I am not entitled to a monopoly on the use of the word “cake” applied to cakes.

In the present instance, Citi seems to have convinced the USPTO that the trademark “thankyou” is not descriptive of a customer loyalty program. I tend to agree. (I am less convinced that “thankyou” meets the other criteria for distinctiveness, which are a bit more complicated, but for argument’s sake let’s say the USPTO’s decision to allow registration was reasonable.) I think it’s a weak mark (more on this below), but it passes a casual sniff test.

Where the real overreach appears, then, is not the ability of Citi to “trademark” the phrase “thankyou” (i.e. to register this trademark in associaiton with a customer loyalty program): instead, it is Citi’s threat of litigation against AT&T for AT&T’s use of “thanks” in association with its customer loyalty program. A weak mark (like “thankyou”) affords very narrow protection: put a space into the middle, for example, and the distinctiveness of “thankyou” evaporates. Taking out the “you” portion altogether is even worse. Taking out the “you” and adding an “s” to make “thanks” is way, way outside the ambit of what Citi could reasonably hope to pre-empt.

This leads us to a deep, dark secret known only to a few jaded professionals in the legal profession: sometimes (and I know this is shocking), large companies threaten other people with litigation even when they know that their case sucks because the law is not on their side, just to intimidate the other side with the prospect of fighting a well-funded legal team on the other side. Please, sit down for a moment and try to catch your breath. Your worldview is probably going to take a few weeks to fully reconstitute itself, so take all the time you need.

“For multibillion dollar companies, this is not a big waste of money.”
If they have money to waste in those legal shenanigans (also using the public legal system), they are way, way undertaxed. Don’t like Obama and the Government? Fine, make them send the money to Samaritan’s Purse or the Salvation Army.

Undertaxed? Maybe, but I would probably adjust the setting somewhere else in the system.

Do you know the part in “A Civil Action” where the plaintiff lawyer played by John Travolta (sue me, I didn’t read the book) tells his clients that paying you money is how corporation apologize to you? Well, suing each other is how corporations talk to each other (more on this in my other comments below).

Basically, publicly-traded limited-liability corporations are like giant, autistic psychopaths. Back in the gilded age (aka the libertarian golden age), the courts decided that in spite of the special legal protection of limited liability (a kind of financial super-power that has hella perverse effects on incentives), these corporations should be afforded the full rights of “persons” under the Constitution. Fast forward 100 years and they run our entire society.

Very well said Picador. But if you’re a practitioner in this field (and I’m not, but keep abreast of it a bit) you know the trend over the last generation is for companies to fight for, and get, protection on descriptive marks, see, https://en.wikipedia.org/wiki/Trademark_distinctiveness#Descriptive_marks That’s the modern trend, and big companies have the advertising budget to pull it off. Acme’s Salty (R) crackers anyone?

Yeah, you can get around descriptiveness by what’s called “acquired distinctiveness”. That’s where you’ve been using a mark for so long, so widely, that everyone knows it and associates it with your wares or services. Something like “America On Line” might fit the bill: descriptive of the service, but so well-known that it has acquired distinctiveness. Also note that the strength of a mark is limited by its degree of distinctiveness: a very distinctive, strong mark affords broad protection, while a weak or descriptive mark affords only narrow protection. So someone trying to market ISP services as “Alabama On Line” might not cause confusion with the America On Line mark, but an existing ISP using the mark “America FooNet” could claim confusion by a competitor calling themselves “Alabama Foo ISP”. In general, nonsense words are the strongest marks.

Also: trademark examiners at USPTO are not infallible, and they can be worn down by a sufficiently dogged, well-funded trademark agent. After years of back and forth argument, it is not unheard-of for trademark examiners to throw up their hands, hand over the registration, and figure that the courts will sort it out if the registrant ever tries to enforce it. In their defence, they have heavy caseloads and a limited amount of time to devote to each case, and determined agents can do things like call in their supervisors or appeal their rulings to tribunals where they pick apart their responses line by line. There are imperfect incentives on both sides.

So, I see how that works if Citibank wants to use the threat of their deep pockets to harass me, but I don’t see how it works against AT&T, which also has a large legal staff and so isn’t so easily intimidated. What’s the point?

Daniel Weber said it above at #21: “Citigroup and AT&T are going to spend a few million a year defining the exact border between themselves. For multibillion dollar companies, this is not a big waste of money.”

Lawsuits are how large companies talk to each other sometimes. It allows them to collude without running afoul of antitrust laws.

sometimes (and I know this is shocking), large companies threaten other people with litigation even when they know that their case sucks because the law is not on their side, just to intimidate the other side with the prospect of fighting a well-funded legal team on the other side.

I know. The fact that the legal system can be so easily gamed and exploited to intimidate people seems to be an excellent reason to hold it in contempt. It is doing almost the exact opposite of it’s intended function.

ad: You are right. The legal system is imperfect, and often produces perverse outcomes. A number of structural impediments stand in the way of reforms that might solve this problem, not least of which is the pervasive effects of legal bribery in the political process.

Historically, the alternative to the rule of law has been pistols at dawn. In fact, in the libertarian golden age of our ancestors, large companies like Citibank would have just rallied their private armies of thugs to machine-gun their smaller opponents to death, as in the age of the great industrialists who made American capitalism what it is today. Before that, one did the same thing, but with catapults and swords.

A very clear exposition; thankyou.
🙂
Surely, however, a degree of concern at the growing practice of large companies appropriating commonly used language, and defending their ‘ownership’ across a wider field than trademark law would suggests they are legally entitled, is in order ?
Not least on the part of those of us with smaller legal departments than AT&T.

Nigel: Absolutely. It sucks not to be AT&T when there are packs of lawsuit-happy Citibank lawyers roaming the back alleys of Manhattan.

You would think that reforms to address the imbalance of power between small entities and large entities in litigation would be at the top of the political agenda. You would of course be wrong. Instead, we have the opposite: legislative proposals to limit the ability of small entities and individuals from asserting their rights in court against larger entities. These legislative reforms are called, variously, “tort reform”, “medical malpractice reform”, and so on, and they are specifically crafted to further tilt the playing field against small entities and in favour of some of the largest and most profitable entities in the country. The fact that those same entities tend to take advantage of the United States’ idiosyncratic system of legal bribery of politicians may be related to this odd set of priorities held by legislators.

AlexT, c’mon man, you know as well as I you’re not going to get 100 comments on this IP post. Most people don’t care about IP! And you know as well as I there’s no ‘innovation’ requirement in trademarks, read the primer post by Picador upstream.

I think we need to wait for people who grew up with the internet to get into power to get the public and the government to realize just how horrible copyright is. The economist point of view to copyright is that it is always a trade-off and with the internet, this trade-off has gotten worse and worse.

I think that’s a fair assessment of the various IP regimes in the US. Even a free-culture anti-IP partisan is likely to agree with the core function of trademarks law: in theory (and often in practice) its consumer-protection effects outweigh its rent-seeking effects. Of course it still has its share of horrible abuses, but at least in theory it does a lot of honest work.

Copyright’s big problem is that it’s a regime of industrial regulation that got completely taken by surprise by digital technologies. The incumbents lobbied hard to have the same industrial standards governing commercial book piracy and unlicensed sheet music applied to every six-year-old texting a My Little Pony gif to her friend. Legislators and federal bureaucrats have been happy to indulge their golfing buddies in the RIAA and MPAA, and the six-year-olds have been collateral damage.

I hope you’re right in your prediction that the six-year-olds will have different ideas when they get elected to Congress in a few years. But people are really, really good at buying in to a corrupt and unjust status quo, even when (especially when?) they have been victimized by it in the past.

One of the fundamental problems with the entire regime is that “property” is a poor foundational concept for creating a regime that allows innovators to discourage others from profiting from their ideas. Property concepts were invented to address how to adjudicate between private parties rights in a scarce commodity. Copyright and patents law involve things that can be reproduced nearly perfectly for minimal cost.

Unjust enrichment would have been a far better touchstone than property law. In still reaches the same result in cases of blatant commercial appropriation of raw copies, but is not nearly so punitive in instances where current IP law stifled innovation.